The U.S. January consumer price report showed no signs of accelerating inflation. Meanwhile, initial unemployment claims information covering the Feb. payroll survey period suggest little movement in labor market conditions. These data suggest a steady-state, modest growth economy.
January CPI posted +0.1% and core was also +0.1% (+0.1278% unrounded). These represented +1.6% overall and +1.6% core over the year, all about as expected.
New seasonal adjustment factors seemed to damp the recent moves in CPI. The changes to October to December 2013, released earlier in the week, for example, now average +0.1%. And January 2014's gain, +0.4% before adjustment, was turned into the far lower +0.1% that was reported.
Food prices posted +0.1% in January as dairy was +0.5% and meats, poultry and fish +0.4% but fruits/vegetables and nonalcoholic beverages fell.
Energy posted +0.6%, with gas -1.0% (+1.4% before adjustment) but electric +1.8% (largest gain since March 2010). Natural gas and fuel oil also jumped. Bad weather probably increased utilities usage but the overall net price effect is unclear.
In core, drugs posted +0.6% and tobacco +0.7% (the biggest gain since July) but new cars -0.3%, used cars -0.3%, apparel -0.3% (shoes and men's clothing fell) and airfares -2.2% were offsets. Owners' Equivalent Rent posted +0.2%.
There is no danger of inflation from these numbers. The main worry remains that prices are too slow in moving higher.
In a separate report, initial unemployment claims for the Feb. 15 week fell 3,000 to 336,000, with no special factors. We suspect this is close to trend.
Initial Unemployment Claims were 329,000 in the mid-January period, and the latest level for the February employment survey period suggests
little movement in the labor market.
State data from the prior period confirm a "storm and snow reversal effect" -- states in the Northeast and Ohio, where weather improved,
represented the bulk of the week's decline, while Georgia had a massive offsetting 7,229 unadjusted jump in claims as ice storms started.
Continuing claims jumped 37,000 to 2.981 million in the Feb. 8 week, a slight bump up.
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